1. Implement GST from July 1, and keep fine-tuning it

Implement GST from July 1, and keep fine-tuning it

There is no point in delaying Goods and Services Tax (GST) further, but it is also true that the current structure requires changes till it reaches the ‘moderate rates with minimum slabs’ model.

By: | New Delhi | Updated: June 2, 2017 10:45 PM
GST, GST council, GST council, tax rates,  Arun Jaitley, indirect text, electricity, real estate, Srinagar It is good that the government’s idea at present is to test the waters till the end before taking a final call on the possibility of delaying it to give the industry and the officials some more time to fix the gaps.

 There is no point in delaying Goods and Services Tax (GST) further, but it is also true that the current structure requires changes till it reaches the ‘moderate rates with minimum slabs’ model.

The Goods and Services Tax (GST) will be a reality in less than a month if the central government and the GST council finally decide to stick to the July 1 deadline by addressing the industry’s concerns related to its implementation on the ground, and also those related to the tax rates. It is good that the government’s idea at present is to test the waters till the end before taking a final call on the possibility of delaying it to give the industry and the officials some more time to fix the gaps.

In any case, the GST has to be implemented before September 16, as specified by the Constitutional amendment, and it is better to start as early as possible so that all the stakeholders get time to adjust to the new system by then.

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There is no harm in starting with a lenient approach in terms of enforcement of the norms outlined by the statutes and then move towards a full-scale implementation in the next few months, instead of delaying it.

In what could be one of the last meetings prior to the implementation of the nationwide integrated indirect tax structure, according to a government release, the GST council under the chairmanship of finance minister Arun Jaitley, on Saturday, is set to ‘finalise the rates of tax and cess to be levied on the commodities remaining after the fitment exercise in the 14th GST council meeting’ held in Srinagar last month.

The decision on the rates for seven critical items—biscuits, gold, textiles, handicrafts, footwear, bidis and agricultural implements—will complete the rate fixation process for the time being. There may also be some changes in the rates fixed earlier for items like solar panels (18%) and detergents (28%) to bring down tax incidence on them. Whether the tax rates on biscuits will be fixed on the basis of their prices and a 5% rate will be applicable for gold, or not, will be known by tomorrow, but going ahead the rates and the number of slabs for all goods and services need to be revised.

At present, they are to be taxed at 0% (exempt), 5%, 12%, 18% and 28%, with cess on items like tobacco and luxury cars over the top rate to fund compensation for the states’ revenue losses, if any, for five years.

These rates, though in general, have been kept around the same level as they are currently, must come down as the base expands and compliance improves along with the inclusion of at least petroleum products to begin with, and even electricity, real estate and liquor for human consumption, going ahead. For getting full benefits of the GST, it is crucial to target moderate rates with minimum slabs.

 

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